Feb. Jobs Numbers Explained/ $15 Minimum Wage Fails Again

The report for February showed low job-creation numbers. CNBC.com reported:

Job growth came to a near halt in February after a blistering start to the year, with nonfarm payrolls increasing by just 20,000 even as the unemployment rate fell to 3.8 percent, the Labor Department reported Friday.

It was the worst month for job creation since September 2017, when two major hurricanes hit the employment market, offset somewhat by a solid increase in wages.

The month fell short of the relatively modest expectations of 180,000 from economists surveyed by Dow Jones. The unemployment rate had been projected at 3.9 percent from January’s 4 percent.

“I think it’s a very fluky number,” Larry Kudlow, director of the National Economic Council under President Donald Trump, told CNBC in a “Squawk on the Street” interview.

The jobless rate fell in part because of the vagaries the Labor Department uses to calculate the headline rate — there was an increase of 198,000 in those considered not in the labor force, while those classified as unemployed fell by 300,000 and the ranks of the employed decreased by 45,000, according to the household survey.

This 20,000 jobs report is indeed a “fluky number” and should be taken in context. After all, the economy has been doing fantastically well since the day Trump was elected.

The current economy has hundreds of thousands of jobs that cannot be filled because there are not enough workers. Thus we do not even need huge new job creation numbers. Stay calm. The economy is doing just fine in the long run after more than two years of steady growth and more to come as long as Trump policies remain in effect.

$15 Minimum Wage Fails Again

Breitbart News reported about the supermarket chain Whole Foods, which is owned by Amazon:

Amazon finally caved to pressure for a company-wide $15 minimum wage in November. At Whole Foods, the difference looks to be made up in cuts to scheduled hours.

According to reports by the Guardian, employees — who remained anonymous in fear of retaliation — have experienced “significant” decreases to their scheduled hours. In many cases, this negates or even supersedes the increased hourly rate.

Employees report a “30% reduction in hours per week for part-timers and about a 10% reduction for full-timers,” with one Illinois-based employee specifically saying that after the raise, his “hours went from 30 to 20 a week.”

He explained that “once the $15 minimum wage was enacted, part-time employee hours at their store were cut from an average of 30 to 21 hours a week, and full-time employees saw average hours reduced from 37.5 hours to 34.5 hours.”

He reportedly “provided schedules from 1 November to the end of January 2019,” demonstrating his claims and showing that the overall store budget thus remained about the same despite the wage increase.

The employee also said that workers were directed to complete tasks faster to stay in line with their new hours, and an internal e-mail from a member of management confirmed that the decision was a “direct result of guidance from our regional team.”

Friends, in case you don’t know the truth about this $15 an hour minimum wage, it is just more socialist pie-in-the-sky that does not work. It is a classic zero-sum game – while it helps some workers, it hurts others.

Whole Foods is a perfect example. They need to save money to pay the higher wage so they cut back employee hours and force employees to work harder. It is also common for employers to cut benefits like health insurance, paid leave, etc., in order to pay the higher minimum. One Seattle restaurant had been allowing employees to eat for free but eliminated that when the minimum wage went up.

For instance a restaurant owner will order the manager or a waiter to mop the floor rather than pay $15 an hour for a floor mopper. Or the hostess job is eliminated and patrons are asked to seat themselves. Or waiters are asked to clear tables rather than hiring someone to bus the tables.

In other words, low-end jobs like floor mopper and table busser are eliminated. This harms the very same people that the higher minimum wage is supposed to help.

We all have seen fast-food restaurants using touch-screen ordering to eliminate the low-skill order-taker job. And now robot hamburger cookers and french-fry makers are replacing human workers as wages go up.

In the case of Amazon, which raised its minimum to $15, The Daily Caller reported:

Although every employee experienced an increase in hourly pay, nearly every benefit and bonus went away, which ultimately resulted in a net loss for workers.

Here is the Nikitas3.com solution: Allow employers to pay employees what they wish and can afford. The employer knows how much he can afford to pay.

For instance, imagine that a hardware store owner wants to pay two high-school kids $10 an hour to do an odd job like cleaning up and organizing the basement of the store on a Saturday. Under the $15 law, he can’t do that. So the kids miss out on $80 in spending money and the basement remains disorganized.

The same Democrats and socialists who want a higher minimum wage also are pushing more regulation and taxes on businesses. It is triple-whammy against the business community.

The problem is that most Democrats in government have no experience in business so they don’t understand how costs mount through regulation, taxes, higher minimum wage laws, etc.

There is an interesting story about the left-wing 1972 Democrat presidential candidate George McGovern, who lost the election in a landslide. After he retired from the Senate he became owner of a hotel in Connecticut. Wikipedia reports:

McGovern had made several real estate investments in the D.C. area and became interested in hotel operations. In 1988, using the money he had earned from his speeches, the McGoverns bought, renovated, and began running a 150-room inn in Stratford, Connecticut, with the goal of providing a hotel, restaurant, and public conference facility. It went into bankruptcy in 1990 and closed the following year. In 1992 McGovern’s published reflections on the experience appeared in Wall Street Journal and the Nation’s Restaurant News. He attributed part of the failure to the early 1990s recession, but also part to the cost of dealing with federal, state, and local regulations that were passed with good intentions but made life difficult for small businesses, and to the cost of dealing with frivolous lawsuits. McGovern wrote, “I … wish that during the years I was in public office I had had this firsthand experience about the difficulties business people face every day. That knowledge would have made me a better U.S. senator and a more understanding presidential contender.” His statement would still be resonating with American conservatives two decades later.

And get ready for Democrats to push for $20 an hour minimum wage now that $15 is spreading. This is how Democrats always operate. They never stop making demands.

These big increases – with the Congress now proposing to make the nationwide federal minimum wage $15 (up from $7.25) – do not magically produce wealth for the workers. They simple represent a transfer of wealth from one group to another.

If these wage increases made life better for everyone, then government could simply order every worker to earn $50,000 a year. And we know for certain that that would cause an economic collapse with millions of businesses closing and tens of millions of jobs lost.

Here is why: There is only so much wealth in the country. If you decide that it is unevenly distributed and that, say, a doctor makes $200,000 a year while a Walmart shelf stocker makes $22,000 (or $11 an hour), then the answer for Democrats is to get the government to force Walmart to pay the shelf stocker more.

They do this even though the doctor worked very hard to become a doctor and the shelf stocker has no skills or education and has never worked hard to improve himself/herself.

Even a company like Whole Foods which is owned by one of the richest companies in the world (Amazon) which is owned by the richest man in the world (Jeff Bezos) is not going to pay someone $50,000 a year to stock the shelves.

The unskilled job simply is not worth that much. In fact Whole Foods could probably advertise for and find workers willing to stock shelves for $10 an hour, which equals $20,000 a year. So if an employer can find employees willing to do a simple job requiring no education or skills at $10 an hour then the government should not force him to pay more. After all, the labor market is naturally supplying him with workers at $10.

On the other hand, if Whole Foods cannot find shelf stockers at $10 an hour, then it must offer more to entice workers. It is called “supply and demand”, which means that prices (wages) go up naturally when supply (available workers) is restrained. And in the thriving, full-employment Trump economy, many companies are offering higher wages just to find workers, who have become harder to find. Thus a strong economy is the best way to increase wages naturally.

Last Autumn, Nikitas3.com saw a sign in a small town in Vermont at a convenience store for a clerk/cashier job. The offered wage was $11.50 an hour, or $1 an hour higher than the state minimum. This was offered to entice workers in the booming economy, i.e., workers are finding good jobs everywhere and so wages must rise naturally to attract them to the convenience store. No government coercion is needed.

And $11.50 an hour in a small town in Vermont is easily equal to $15 an hour in a place like Seattle after you account for big cost-of-living differences. And this $11.50 has happened naturally under the Trump economy.

The cutback in hours for the workers at Whole Foods shows what happens when the government gets involved.

Remember the Big Truth:A government-mandated minimum wage does not “create” new wealth. It represents a “transfer” of wealth, like from other workers in the Whole Foods case above (other workers see their hours cut back to save the money to pay the higher minimum wage). Existing workers also may not get raises in order to pay the higher minimum wage to new workers.

Here is another example: Nikitas3.com recently visited McDonald’s for a double cheeseburger. I buy them occasionally but hadn’t had done so in a few years. Four years ago they were $1.49. On my recent visit they were $2.49. So I will buy fewer double cheeseburgers.

The big price increase is largely a result of McDonald’s being forced to pay increasing minimum wages across the country. They get the money for higher wages by charging more for their products. So the higher wage is being paid by people like Nikitas3.com paying higher prices for the double cheeseburger.

Even worse, some restaurants and businesses are closing or cutting back their hours because they cannot afford to pay the increasing minimum wages. This hurts the very same people that the higher minimum wage is supposed to help.